RSI and Stochastics can remain extreme for reasonable periods of time when US Oil trends. Oversold conditions for these two indicators does not necessarily mean a low must be in place.

Very strong volume over the last three days supports downwards movement.

Sometimes after a breakout price curves back to retest prior support or resistance. It is possible here that US Oil may turn up for a test of resistance about 50.70. However, this does not always happen.

HOURLY CHART

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While price remains within this channel expect it to continue downwards. If the channel is breached, then a larger bounce may be underway.

ELLIOTT WAVE ANALYSIS

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A larger flat correction may be unfolding for a fourth wave (EWG members should refer to the US Oil monthly chart for the bigger picture here). Within a flat correction, intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 28.61.

The last three daily candlesticks complete stalled pattern. The longer upper wick on the last candlestick is bearish. Declining volume for the last two upwards days is bearish.

On Balance Volume is bullish in that it is making strong new highs with price. There is some bearish divergence as noted.

Overall, it does look like this is a counter trend movement. But there is no indication it is over at this stage, so it may move higher.

ELLIOTT WAVE ANALYSIS

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The fourth wave is now very close to first wave price territory. If this portion of the wave count is correct, then there is very little room for NGas to move into. The target expects a long strong extended fifth wave, typical of commodities.

If there is a resumption of the larger upwards trend, then this next wave up is in its very early stages. In the short term, it looks like USD Index has made a relatively deep correction. Support is about 100.60. If price can break above resistance at 103, then next resistance is about 103.50.

ELLIOTT WAVE ANALYSIS

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The structure of primary wave 5 is still incomplete. If the current correction moves lower, it should find support at the lower edge of the trend channel. If that trend channel is breached, then the wave count would be in doubt.

This analysis is overall neutral, neither bullish nor bearish. ADX is now declining after reaching extreme. Divergence with price and RSI (red lines) is bearish. Either a larger consolidation or a trend change is a reasonable expectation at this time, but no trend change has yet been indicated.

Volume is so far inconclusive. Sometimes at the beginning of a bear move volume can be light as the market falls of its own weight. However, light and declining volume does not support the fall in price so far.

TREND LINE ANALYSIS

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The long term green line was perfectly touched just three weeks ago. This may provide strong resistance. The lilac line has now been breached (this is seen more clearly on the chart below). However, this lilac line is too steep for reasonable technical significance. That is the risk at this time with this analysis.

ELLIOTT WAVE ANALYSIS

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The lilac line has been breached and price has now turned up to find resistance there. If the green line holds, then this lilac line should too.

This market so far is moving upwards as has been expected. I am publishing this chart again today because at this time it may be offering a good opportunity to join a trend in the relatively early stages.

ADX is below 15, so no trend is yet indicated. ATR is still declining. These two indicators together signal caution about a potential upwards trend.

RSI is neutral. MACD and Bollinger Bands are bullish.

I particularly want to draw attention to the long lower wicks of the last three daily candlesticks. These are bullish.

ELLIOTT WAVE ANALYSIS

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This chart is the same as the last published daily Elliott wave chart for USD Index with the exception of the short term support line which is slightly redrawn. Notice the long lower wicks on the last three daily candlesticks and how they all sit neatly on the trend line.

Analysis of DAX is presented in response to a reader’s request and not because it offers a good opportunity at this time.

Some larger sideways consolidation or a deeper pullback here is a reasonable conclusion after ADX reached extreme and RSI exhibited double bearish divergence over a reasonable period of time. At this time, it looks like DAX is in a consolidation with an upwards bias. The risk here is a deeper pullback may develop.

VOLUME ANALYSIS

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StockCharts do not offer volume data for international indices. This is FXCM volume data.

Watch On Balance Volume closely over coming days. If it breaks out of the current range, that may precede the next direction for price.

Strongest volume of recent days is for downwards days. This is bearish.

ELLIOTT WAVE ANALYSIS

QUARTERLY CHART

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A Super Cycle fifth wave may be completing. Super Cycle (IV) may have been a large contracting triangle, or it may have been a more brief zigzag (alternate weekly chart below).

MONTHLY CHART

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The triangle fits, but it is not supported by MACD hovering about zero. This is not a requirement but does add confidence when it occurs.

A correction for intermediate wave (4) may not move into intermediate wave (1) price territory below 10,807. Intermediate wave (3) may be over. This is supported by classic technical analysis. A deeper pullback may occur here, maybe to the 0.236 Fibonacci ratio about 11,527. That would see intermediate wave (4) end within the price territory of the fourth wave of one lesser degree.

It is my conclusion at this time that DAX does not offer a good trading opportunity. The upwards trend looks stretched at this time, so a pullback may occur. If it does, then at its end it may offer an opportunity to join the upwards trend.

ALTERNATE MONTHLY CHART

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The conclusion for the short term may be the same even if the triangle is wrong. Cycle wave IV may have been a quicker zigzag. Cycle wave V may still be within the final fifth wave up. The daily chart would be the same for this idea.

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

Natural Gas continues lower as the last analysis expected. Today’s strong volume spike may be a selling climax. In the short term, it may be followed by a small consolidation before price may continue lower.

For the very short term, if price breaks above the steeply sloping rose trend line, then look out for a deeper correction. Expect price to fall to next support at 2.55 while price remains below that line.

This trend is not yet extreme and there is no divergence yet between price and RSI to indicate weakness.

ELLIOTT WAVE ANALYSIS

MAIN WAVE COUNT – WEEKLY CHART

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This wave count expects Natural Gas is in a new bear market to last one to several years.

MAIN WAVE COUNT – DAILY CHART

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If a deeper correction does develop here after the selling climax, then it may be a primary degree fourth wave that may last a Fibonacci 13 or 21 days. First, the rose trend line on the TA chart above must be breached to indicate primary 3 is over. So far it is less than 1.618 the length of primary wave 1, so it is likely to continue further.

ALTERNATE WAVE COUNT – WEEKLY CHART

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Downwards movement from the last high may be primary wave B coming to an end as a very common expanded flat correction.

ALTERNATE WAVE COUNT – DAILY CHART

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Minor wave 3 has only just broken below the lower edge of the base channel. This is how a third wave should behave. The selling climax of the 21st of February may be followed by a brief shallow correction before price continues lower to complete minor wave 3. Minor wave 4 may not move into minor wave 1 price territory.

Both Elliott wave counts expect Natural Gas to continue lower from here at least to make a new low below 2.549. That has not happened yet.

I have published this pair often in Trading Room. That is because I consider it to be a good opportunity at this time. The idea of Trading Room is to look for markets that are trending and find entry points to join the trend in order to have a wider range of opportunities to profit from.

This is my favourite trade set up: a breach of a trend line followed by a back test of support or resistance. USDJPY has done this with the blue trend line.

The risk with this set up is that the trend line is too steep and not often tested, so price may break back below it. The risk does not at this stage look to be high, but it must be acknowledged.

Last analysis of this pair expected a bounce to unfold after the candlestick of the 15th of February showed a bullish long lower wick. This was followed by a strong upwards day, and now a strong downwards day.

This is not correctly a bearish reversal pattern; the red candlestick for the 17th of February does not engulf the green candlestick for the 16th of February. However, it is still a strong downwards day and is bearish. Price may now be finding some resistance at the Fibonacci 13 day moving average and the mid line of Bollinger Bands.

ELLIOTT WAVE ANALYSIS

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On Balance Volume remains bearish. A purple resistance line is added. The last test is another small bearish signal.

This pair is presented in response to a member’s request. While the Elliott wave count is bearish, this classic analysis is not so much.

The last two upwards trends reached extreme. Since the high on the 16th of January downwards movement has brought ADX down from extreme. There is again room for a trend to develop.

This market currently looks range bound. Resistance is about 0.8650 and support is about 0.8450. The bottom line is a breakout would be required before any confidence may be had that this market is trending.

ELLIOTT WAVE ANALYSIS

MONTHLY CHART

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The large downwards wave labelled Super Cycle wave (II) will not fit as a five wave structure. It will only fit as a three. This may be the end of the bear market.

The upwards wave labelled cycle wave I looks like a very good five wave impulse. It should be expected to reasonably be followed by a three wave down movement for a second wave correction, which is most likely to end close to the 0.618 Fibonacci ratio.

DAILY CHART

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C has not yet moved beyond the end of A to avoid a truncation. The target has a good probability.

While classic analysis is not very bearish, this Elliott wave count is.

Use the lilac line for resistance.

Volume analysis:

The strong volume for the last session of the 21st of February supports this wave count. The fall in price is supported by volume here as a third wave should be.

On Balance Volume is giving no signal, either bullish or bearish.

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

In the mid term, there is a new downwards trend for Gas. Use the Magee trend line for resistance.

In the short term, price may bounce up here from the 200 day moving average. The slight decline in volume for the last two days, along with small range days, looks like bears are temporarily exhausted. Expect a bounce as fairly likely.

The trend channel about cycle wave b has been breached now at the weekly and daily chart level. This may offer some confidence in a trend change.

DAILY CHART

Click chart to enlarge.

Cycle wave b may be complete. A cycle wave c down may be in the early stages. This wave should last one to several years if the wave count is correct. The lower edge of the channel about cycle wave b is now breached by two daily candlesticks.

Look for bounces to find resistance at the Magee trend line.

I do have an alternate wave count, but it too is bearish at this time. Publication of it would add nothing to the analysis. If any member wants it, then please email me and I’ll send it to you.

Price has moved upwards, as expected, since last publication of analysis of this pair. There is now a full daily candlestick above the blue line, which previously provided resistance and may now provide support.

This wave count has excellent alternation and Fibonacci ratios. There are also some close Fibonacci durations for waves.

If intermediate wave (4) moves lower, it should find strong support at the lower edge of the best fit channel. Double zigzags are reasonably common structures. Triple zigzags (labelled W-X-Y-X-Z) are very rare. If intermediate (4) is correctly labelled as a double zigzag, then the probability that it is over here is very high.

VOLUME ANALYSIS

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Volume increased during the middle portion of the pullback, and now at the last low volume declined as price fell; the market fell of its own weight. This points to a tired trend. Price certainly could move lower here, but the probability of a low in place has slightly increased.

On Balance Volume is at support. If it breaks below the yellow line, that would be a bearish signal.

The long term trend should be assumed to remain upwards until proven otherwise. This downwards movement should be assumed to be a pullback within a larger upwards trend.

Looking back at price behaviour in the last upwards wave from the left of this chart: price starts out slowly with choppy movement, generally trending, and it is not until the middle of the movement that Bollinger Bands widen and ATR shows a good increase. Then the trend quickly became extreme, yet price continued upwards while ADX steadily declined from about 45. So trends for this market can remain very extreme for long periods of time.

The current situation looks similar to that back in September 2016: ATR is declining as price moves up, Bollinger Bands are contracting, ADX is low and below both directional lines, and RSI is neutral. In the current day, Stochastics is also returning from oversold and exhibits single bullish divergence at last lows.

It is looking like USD index may be in the very early stages of the next wave upwards.

Unfortunately, neither BarChart nor Stockcharts provide volume data for the USD Index, so no volume analysis can be done.

ELLIOTT WAVE ANALYSIS

Click chart to enlarge.

The structure of intermediate wave (3) and of primary wave 5 is incomplete. Price has found support and bounced up off the best fit channel. The short term yellow resistance line is breached. It is looking increasingly likely that USD index is beginning the next wave up.

Since last analysis of this pair, which was very bearish, price has fallen and closed below the short term Fibonacci 13 day moving average. The long, red daily candlesticks look bearish, and the longer upper wicks on the first two are bearish.

RSI is now neutral and Stochastics is returning from overbought. There is room for this wave down to continue.

ADX was extreme. It has a long way down to go before it would again indicate a trend.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

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The green support line has been fully breached.

The structure here is seen as a leading expanding diagonal. The fifth wave of minute wave v must be longer than minute wave iii to meet the rule regarding wave lengths for expanding diagonals. This gives the minimum target calculation.

A trend line is drawn about On Balance Volume, which has been tested at least three times before and is long held. It is now breached and OBV is coming up for a back test of resistance. If this line holds, it would be strengthened and more confidence would be had that price has turned.

The three red daily candlesticks in last week saw increasing volume. This supports downwards movement and adds confidence in a trend change here.

Support and resistance lines are added this week. Look for support next at 1.055.

This pair is not as clearly bearish as NZDUSD, but it does look like they may be turning downwards together. Look out for Bollinger Bands to widen as volatility returns to this market.

Stochastics is returning from overbought after exhibiting divergence there. If it reaches oversold while price reaches support, then this market will be carefully analysed for any weakness in downwards movement.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

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On Balance Volume remains bearish. A back test of resistance for both yellow trend lines has happened and OBV has turned down from both giving bearish signals.

The best fit channel has been breached. A one day throw back occurred right after the breach, but price may still curve up and around for a longer back test of resistance. That is the risk here to short positions.

US Oil entered a consolidation back in December 2016. Since then price has been fluctuating with typically choppy movement from resistance to support and back again. Resistance is about 54.15 to 54.35 and support is about 52.15 to as low as 50.70. During this long consolidation, it is now two upwards days that have strongest volume suggesting an upwards breakout is more likely than downwards.

On Balance Volume has last week given a strong bullish signal.

Prepare for an upwards breakout. This may happen this week.

A classic analysis target would expect price to travel at least the distance of the widest part of the consolidation after a breakout. That would expect a movement of about 4.53.

ELLIOTT WAVE ANALYSIS

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The Elliott wave analysis is overall very bearish for US Oil. This is an alternate wave count that is published here because it aligns with the classic technical analysis today.

This wave count expects essentially that any upwards breakout may be false and short lived.

The Trading Room is a new idea that I want to test and develop over the next few months.

I find myself spending a lot of time writing and publishing analysis of Gold and the S&P500 (over at Elliott Wave Stock Market) when those markets are quiet and range bound and offer no good trading opportunities. This focus on inactive markets takes focus away from markets that are trending and do offer good trading opportunities.

What if the focus was on finding good trading opportunities over a range of markets rather than daily analysis of specific markets? What if the Trading Room can be the platform for publishing these good trading opportunities?

Therefore, this Trading Room approach will look over a range of markets to identify any possible trading set ups which may unfold now or over the next few days, and the focus will be on trading set ups and not on teaching and learning Elliott wave.

Analysis will be brief and to the point.

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Today’s Trading Room focuses on NZDUSD, EURUSD, USD, and GDX:

EURUSD

TECHNICAL ANALYSIS

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So far upwards movement should be assumed to be a counter trend movement, until proven otherwise. The prior wave down put ADX into extreme and upwards movement from the 3rd of January has brought ADX back down from extreme. There is again room for a trend to develop.

Single divergence with Stochastics on its own is not enough to indicate a high in place. A breach of a support line should be seen before entering short.

Stockcharts do not offer volume data for currencies, so this is analysed below with BarChart data.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

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The best fit channel is slightly adjusted to be more conservative than the last published chart for EURUSD. If price can print a full daily candlestick below the lower edge of the yellow channel, that would offer further confidence in a trend change. When that trend line is breached, then it should offer resistance.

Stops may be set a little above the trend line offering a low risk high reward opportunity. Do not set stops too close to the line; allow the market room to move. Sometimes trend lines are overshot and this trend line is not perfect.

On Balance Volume has confidently breached a horizontal support line which offers strong technical significance. A retest of resistance at that line shows it holds. This is a strong bearish signal.

NZDUSD

TECHNICAL ANALYSIS

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Classic technical analysis of this pair is very bearish. The long upper wick on this last daily candlestick is bearish. This trend is extreme; it will end sooner rather than later.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

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On Balance Volume has no trend line. Any trend line drawn would have too steep a slope to have reasonable technical significance.

If an expanding diagonal is unfolding, then minute iv must be either over now or very close indeed. There is almost no room left for it to move.

I have been analysing NZDUSD (because I’m a Kiwi) for years using Elliott wave and I will note that NZDUSD rarely offers good looking Elliott wave structures. Therefore, I place more weight in classic analysis of this pair than Elliott wave analysis. The Elliott wave analysis is supplementary.

I will wait for the green support line to be fully breached before going short here.

USD INDEX

TECHNICAL ANALYSIS

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There is not enough bullish indication here to go long yet. Upwards movement on this chart is a clear trend and downwards movement is choppy and overlapping, so downwards movement looks more like a counter trend movement. If that conclusion is correct, then USD should break out upwards.

The larger trend at the monthly chart level remains up and the 200 day moving average still has a positive slope.

ELLIOTT WAVE ANALYSIS

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Neither Stockcharts nor BarChart have volume data.

The short term yellow resistance line has been breached. However, the long upper wicks on the last two daily candlesticks gives some cause for concern.

Price may be bouncing up from the lower edge of the best fit channel. With another upwards day moving further away from the trend line, a long position may be entered. A stop may be set just below the last low.

GDX

TECHNICAL ANALYSIS

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Next resistance is at 26.0.

This chart is provided today mostly for members of Elliott Wave Gold and not because I see a trading set up here, because I don’t. (That doesn’t mean one does not exist, only that I don’t see it today).

Going long here risks entering at the end of the trend. ADX is nearing extreme and price has closed above the upper edge of Bollinger Bands now for the last four sessions.

Going short here is trying to pick a top. Before going short at least two of the following should be seen: a bearish candlestick pattern, a break of support by On Balance Volume, divergence with price from RSI while overbought, price to move below the short term 13 day moving average.